* When the price of product "X" is (P1=) $42, Shyanne purchases 20 units of product "X" and when the price of product "X" is (P2=) irchases 30 units of product "X". Shyanne's "arc" price elasticity of demand for product "X" is (Ex,x =): O " -0.25 " and the demand for "X" is relatively elastic. O "-4.00 " and the demand for "X" is relatively inelastic. O " -0.25 " and the demand for "X" is relatively inelastic. O "-4.00 " and the demand for "X" is relatively elastic. O "-0.25 " and "X" is a "normal" good. Save & Co
* When the price of product "X" is (P1=) $42, Shyanne purchases 20 units of product "X" and when the price of product "X" is (P2=) irchases 30 units of product "X". Shyanne's "arc" price elasticity of demand for product "X" is (Ex,x =): O " -0.25 " and the demand for "X" is relatively elastic. O "-4.00 " and the demand for "X" is relatively inelastic. O " -0.25 " and the demand for "X" is relatively inelastic. O "-4.00 " and the demand for "X" is relatively elastic. O "-0.25 " and "X" is a "normal" good. Save & Co
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![### Understanding Price Elasticity of Demand
**Problem 4:**
When the price of product "X" is \( P1 = \$42 \), Shyanne purchases 20 units of product "X". When the price of product "X" is \( P2 = \$38 \), she purchases 30 units of product "X".
Shyanne's "arc" price elasticity of demand for product "X" is calculated as \( E_{x,x} = \):
- \(-0.25\) and the demand for "X" is relatively elastic.
- \(-4.00\) and the demand for "X" is relatively inelastic.
- \(-0.25\) and the demand for "X" is relatively inelastic.
- \(-4.00\) and the demand for "X" is relatively elastic.
- \(-0.25\) and "X" is a "normal" good.
**Calculation Tips:**
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. The formula for arc elasticity is:
\[
E = \frac{\frac{Q2 - Q1}{(Q2 + Q1)/2}}{\frac{P2 - P1}{(P2 + P1)/2}}
\]
Where \( Q1 \) and \( Q2 \) are the initial and new quantities demanded, and \( P1 \) and \( P2 \) are the initial and new prices.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F89831fa0-cc4f-4010-9c5a-6b733e578981%2F17dd21d5-c669-4d63-9498-691368ecb5be%2Fligc23b_processed.png&w=3840&q=75)
Transcribed Image Text:### Understanding Price Elasticity of Demand
**Problem 4:**
When the price of product "X" is \( P1 = \$42 \), Shyanne purchases 20 units of product "X". When the price of product "X" is \( P2 = \$38 \), she purchases 30 units of product "X".
Shyanne's "arc" price elasticity of demand for product "X" is calculated as \( E_{x,x} = \):
- \(-0.25\) and the demand for "X" is relatively elastic.
- \(-4.00\) and the demand for "X" is relatively inelastic.
- \(-0.25\) and the demand for "X" is relatively inelastic.
- \(-4.00\) and the demand for "X" is relatively elastic.
- \(-0.25\) and "X" is a "normal" good.
**Calculation Tips:**
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in the price of that good. The formula for arc elasticity is:
\[
E = \frac{\frac{Q2 - Q1}{(Q2 + Q1)/2}}{\frac{P2 - P1}{(P2 + P1)/2}}
\]
Where \( Q1 \) and \( Q2 \) are the initial and new quantities demanded, and \( P1 \) and \( P2 \) are the initial and new prices.
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